By Abigail W. Adams
Portland, Me., March 12 – Oak Street Health Inc. priced an upsized $800 million of five-year convertible notes after the market close on Thursday at par with a coupon of 0% and an initial conversion premium of 42.5%, according to a company news release.
Pricing came at the rich end of price talk for a coupon of 0% to 0.5% and the cheap end of talk for an initial conversion premium of 42.5% to 47.5%, according to a market source.
J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC are joint bookrunners for the Rule 144A offering, which carries an upsized greenshoe of $120 million.
The initial size of the offering was $750 million with a greenshoe of $112.5 million.
The notes are non-callable until March 20, 2024 and then subject to a 130% hurdle.
They are putable upon a fundamental change.
In connection with the offering, the company entered into capped call transactions with a cap price of $138.875, which represents a premium of 150% over the last reported sales price of stock.
Net proceeds are expected to be $780.5 million assuming no exercise of the greenshoe.
Proceeds will be used to cover the cost of the call spread and for general corporate purposes, which may include potential acquisitions or strategic transactions.
Oak Street Health is a Chicago-based network of primary care centers for adults on Medicare.
| Issuer: | Oak Street Health Inc.
|
| Securities: | Convertible senior notes
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| Amount: | $800 million
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| Greenshoe: | $120 million
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| Maturity: | March 15, 2026
|
| Bookrunners: | J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC
|
| Coupon: | 0%
|
| Price: | Par
|
| Yield: | 0%
|
| Conversion premium: | 42.5%
|
| Conversion price: | $79.16
|
| Conversion rate: | 12.6328
|
| Call options: | Non-callable until March 20, 2024 and then subject to a 130% hurdle
|
| Put options: | Upon a fundamental change
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| Pricing date: | March 11
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| Settlement date: | March 16
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| Distribution: | Rule 144A
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| Talk: | Coupon of 0% to 0.5% and initial conversion premium of 42.5% to 47.5%
|
| Stock symbol: | NYSE: OSH
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| Stock price: | $55.55 at market close March 12
|
| Market capitalization: | $13.37 billion
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